Retail Needs To Change To Survive
Focus on the customer experience and not the bottom line.
The world as we know it is changing and at least some of that change can be contributed to the change in technology and the internet becoming, what some might call an integral, part of our lives. Bother of these have drastically affected the “shopping” or retail market drastically. Today that’s what I’m taking a look at, and I’ll break it down into several sections and sub-sections.
The Current State Of Retail
While I can’t speak for every single sector of the large umbrella of retail or just general shopping, I’ve had my fair share of hands-on experience and with even basic research you can see a downward trend for brick & mortar stores and a rise in Internet purchases that for years everyone talked about, some didn’t believe, and others tried to ignore or fight.
It’s no secret that brick & mortar stores are losing, at least some, of their foothold. Again having worked at several retailers, as part of the management team, I got to see our metrics; from customer count, conversion (guest that buy something, thus becoming customers, overall sales vs budget/goal, reward program stats, and everything in the grand scheme of things.
On our best days, we made budget and hit all our goals, with some extra in the bag. On our worst days we had low budgets and goals, and we missed both our financial budgets, and all our metric goals, such as conversion, reward signups or reward customers already signed up, units per transactions, and sent people home because we couldn’t afford to keep them on the clock when our store wasn’t making money.
Everyone Has A Rewards Program
Well, a lot of retailers do, and some are working on it, whIle more opted out of them. Having worked for several companies that have these programs I have seen some of the backend details of how they operate, their true goals, and what they offer the company by being offered to the customer.
What Is A Reward Program?
A rewards program is a scheme, please ignore the negative connotation that word has, that is created to reward people for visiting and or spending money at a particular business.
Sometimes this reward is based on visits, cash to points, or straight dollar value. In my experience the two most common ways this is done is A) Every dollar you spend is a point and every X amount of points you get rewards, typically it’s a $5 or $10 certificate. B) Every $100 you spend gets you a $5 reward certificate.
While fundamentally these are the same two setups, one has the potential for a better reception and plays better in the mind of modern consumers, and that is option A. That’s because it uses points, and you don’t think about the actual money you’ve spent. You think “Oh I have 100 points, now I get a free $5. Wooo!” At least that’s part of the idea.
These are built to create loyalty, so you don’t go somewhere else. Here is our way of saying thanks for spending your money here. For a business to survive today loyalty is everything, especially if you can get it for a better price elsewhere or online.
The Issue With Reward Programs.
There are a few potential issues with rewards programs, that I have first-hand experience with.
As I stated early, everyone has a rewards program… Well, a lot of retailers have a rewards program. So many exist that it has turned shoppers off to them, and in turn, the next generation of shoppers don’t typically want them. That latter note is from first-hand experience, without doing market research I’d have to say anyone under the age of 22, rough estimate based on my previous two jobs customer base, don’t want or care about rewards programs.
They have their reasons, one being they don’t want to share the required information to signup, have too many already that they do don’t use, or its a one-time shopping experience. So unless that generation changes the rewards programs may start to falter just like the companies that started them.
Another reason I have heard time and time again is that people don’t want to share their information, be it their name, phone number, email, address, or any combination thereof. To some people, this information is very sacred and not something you hand out to the world. Some also have told me, and former co-workers that they don’t want to be tracked by our company or the government. I don’t want to touch that part of the bandwagon, but hopefully, you get the point there.
Another part of it is email. Lord knows that my email has been filled with so much spam it isn’t funny. It took me awhile but I eventually got it under control and it remains empty or has 10 or fewer emails in it 98% of the time. Which is nice. This is what people worry about, spam.
That’s great that you’re companies reward program sends it’s coupons digitally, but to a lot of people that’s spam still, we there it’s daily, once a month, or somewhere in between. If you don’t read it, use it, or just don’t care about that email then it’s spam.
To top things off, some people, feel that these rewards programs aren’t worth it, or are a trick. You spend X dollars and only get a small reward in return. I can’t deny that I’m one of those people.
What About Reward Apps?
The idea of a reward app was great, it appealed to the modern shopper and to the convince brought about by modern technology, like smartphones. All your coupons, your reward points, dollars, and the best of apps will even let you shop through a companies inventory.
But again you have to divulge your information, which some people simply won’t. Then with some companies, like a particular shoe company that I worked for, you leave out some customers by going completely digital, which we did. I had at least a half dozen, if not more, people of vaping ages that didn’t have access to an app on a smart device, and over a dozen who don’t have computers or regular access to one. Some expressed their dismay with the change, I told them that I understand, which I did. Then told them that I would pass it on to higher ups that make those decisions, which I did. Will things change, I don’t know.
At least it does show that the retailers are open to change, even if it’s something that is forced on them by the masses, purposely or not. I say that because we all here talk about how brick and mortar stores are losing out to online stores like Amazon, Jet, even some of the retailer’s online sites. It’s easier, convenient in ways, and you can do it from almost anywhere.
Behind The Scenes on Reward Programs
What a lot of people don’t know or see is how these rewards programs work, behind the scene. What I mean by this is, how do these programs benefit these companies and what is the thought behind them.
Let’s start off with the thought behind them. The idea of giving something, even if it’s small, to your customers for spending money with your company plays off, what I consider a kind of basic instinct of being rewarded. You’re typically only rewarded for doing something good, so by giving you more money to spend, coupon, or certificate for spending money makes us feel good and though we may know better we go “Oh free money!” We know it isn’t free, but it’s not money out of our pocket, so we think it is free.
It also builds brand loyalty, because again you’re giving back to your customers for spending or visiting your establishment. It’s not the winning lotto numbers, but it’s a step in the right direction. Hell, I can’t deny that I even spend a few extra bucks for things, like camera equipment, at places I like more. Mind you no camera shop I’ve ever been to has a rewards program, but they take care of you there, which is all a part of that experience.
Now let’s look at the how. The program’s purpose may vary company to company, but it does help the company better track what their customers are buying, returning, and how they’re purchasing and where they’re doing it.
With the advent of the rewards app, and online rewards accounts you can track what they’re looking at, what items they view the most or for the longest time, what they hate, and while I don’t know the full extent of how each company handles their data it could go as far as to see how they rated, reviewed, and what they said about an item on their website or app.
I worked for a retailer, that offers a wide variety of items from around the world. They didn’t have a rewards program at one point, with the implementation of their rewards program they bettered their business because now they could better track what customers were buying, how much of it were they buying, their spending habits, and what sales or coupons were the most effective and the best ways to market items or sales. All in all, it’s better for them than just being able to say we sold X amount of items, at this price. Now they can back up their sales with customer driven data on a number of items sold, price, sales, and when. Which is great for their company as a whole, let alone the stockholders, which every publicly traded company has to answer to.
I’m not saying that reward programs or apps are bad, but I don’t feel they are aimed at the customer experience or works in their best interest, typically only the companies.
The Most Bang For Your Buck
Every single one of us wants the most bang for their buck. If you can get a bag of candy, plus one extra piece for a dollar versus just a bag of candy, then why wouldn’t you? Mind you this is very simplistic way to look at it, but the points still stand. This is one of many ways that retail companies get us to spend with them.
One of the ways online retailers both win and lose is with shipping. Companies like Amazon offer two-day free shipping. Mind you, you do have to pay for an Amazon Prime membership to get that free two-day shipping. But as we discussed earlier you have to get the most for your money, and a Prime membership offers you access to free two-day shipping, Prime Video, Music, discounts on products, cloud storage, and the list continues to grow. So what’s $100 a year for free two-day shipping?
Well, again they also lose out a bit there, to traditional retailers. With shipping, be it same day, next day, or standard ground shipping, you have to wait. In the meantime, I can go to the store, be it Target, Wal-Mart, and even Safeway now and buy whatever it is that I’m looking for and get it now, not later.
This is a trade off, do you wait for your stuff or do you go out into the world and go through the retail experience to buy what you want and get it now. This is when we start to factor in things like, gas, time, traffic, and how much do we love or hate going to any particular place. You have to have that loyalty, in part because of the experience to make people choose you over the other stores.
I feel the pricing shouldn’t be a trick or a game. I think you should do, as my company does, and create a no-haggle price, and be firm about it. Never haggle, never settle, and make sure that your company does make its money, but don’t sacrifice that experience.
In retail, it may be harder to sell without sales, because that’s what we are used to, but if you focus on the fact that you don’t have to, nor should you make money off one item then you can change it. My company, rather the one I use to work for, plain and simple doesn’t make money by selling one or two cars, we make money by selling thousands of cars annually. That means that the price is lower, and the profit is lower than competitors, even if our price is slightly higher because again you don’t make money, a profit if you will, by selling one item, you make money and your profit off selling a lot of items.
Shopping Has To Be About Experience
This one is possibly the biggest key to maintaining and even improving the traditional retail experience. People want something better than what we’ve been given, typically, over the past 50+ years.
The current company I work for, which is in auto sales, focuses on that customer experience. We bust our butts to make sure that our customers have a new, different, informed, and better experience than what they get at the traditional dealership. So part of what I’m going to say comes from what I’ve seen and do on a daily basis at my current job, as well as feedback and experience I’ve received or heard in some way while working in retail.
We have to first create a culture within the company that focuses on this experience, and on the employees that drive the company culture and keeps the doors open. That means you have to truly care about and take care of the people you hire, by offering things like great benefits, discounts, policies that help ensure that they aren’t attacked for something like calling in sick, which I’ve experienced myself and seen happen plenty of times, despite policies that say that shouldn’t or won’t happen. The key to these policies is to enforce them and if someone breaks them, they need to be talked to about it. Not yelled at, but talked to, asked why they did that, and coached.
My current company offers day one benefits, has great employee benefits inside & outside the company, as well as policies that protect us across the board, from customers to managers. There also isn’t any need to explain one’s self when you have to call out sick, or ask for a personal day or leave for some reason. The managers ask to make sure we are OK, can they help, and then they take care of things on their end. They even ensure that we take our breaks, lunches, and when you’re not at work, then they leave you alone. That isn’t to say that they might not call or text you to ask a question or see if you can cover for some reason, but if you say no then they leave it at that.
This helps create a culture that employees like, hopefully even love. Then they become promoters and like, or love, their jobs more. They want to come to work, and in turn take care of customers or clients, ideally giving a better experience because they are taken care of so to ensure that continue they take care of the customers, plus that’s just part of the job and culture, to take care of your customers. But your employees, your company has to want to take care of the customers for the experience, not for the money.
Next, you have to be transparent. Let the customer know the information if they have a question answer it. If you don’t know, find out. This can be as simple as telling them that there is a coupon. At one of the retailers I worked at, we were told that if the customer doesn’t know about a coupon or about a better deal on the app, then don’t tell them. That wasn’t our job or our fault that they couldn’t figure things out. This particular line came from a district manager, and one thing I didn’t agree with in the slightest, and one I openly opposed and refused to abide by. I was always very customer oriented and focused.
Let your customers know what is going on, tell them there is a sale, let them know about that better deal on the app, and you have to explain how the rewards program work. Don’t make it a mystery for them, give them the information they want and need and let them make their informed decision.
Customers want to be informed, and they even want to be helped and guided through their shopping journey. Haha, that was actually a line from my job. But it’s true that’s what we do, help our customers through their shopping journey. Some may want to be left alone, but there are still a lot of them out there that want that help, and want someone to be there with them as they shop in some way.
Finally, you’ve got to offer them some form of protection on their purchase. This comes in two possible ways. A) Make your return policy straightforward, easy to understand, and quite putting some many other clauses or special working in it that make the customer feel like they were tricked. If something isn’t right, fix it. Keep it simple. If you’re not happy, bring the merchandise back within X days, and we will return your money or help you find what you’re looking for. To make this easier you need to update your systems, if you already haven’t so they can pull up purchases with cards, a person’s phone number, or other information that the customer may provide voluntarily, typically through their rewards program. B) For merchandise that is applicable, you should offer a very straight forward, transparent, and again it isn’t built to trick the customer. That means not just trying to sell this warranty, service plan, or whatever it may be, but explaining it to the customer and answering their questions. Again if you don’t know then you should find out the answer and relay it to them.
I’d say this is achieved by having a company that truly invest in itself, it’s employees, and it’s customers. As well as having exceptional training and coaching. You have to actually train your people, give them feedback, and help them evolve and grow as an employee and even as a person. Let them develop their methods that are stemmed from the basics of the companies way. You can’t get mad at someone for messing up, instead talk to them, discuss what happened and what should’ve happened, then help them take that opportunity and turn it into a learning experience to make sure it doesn’t happen again.
You also have to have open lines of communications, and partnership with your peers. You have to be able to ask for help, give help, and receive help.
This all helps makes the experience better, and by doing so it lessens the blow of spending money to a customer. They may not consciously think about it, but we all know that every company is out to make money, that’s why they’re in business, but when we have a great experience we don’t think we just helped someone make a buck, we also don’t think we’ve possibly been ripped off. We think about the experience, how we got a deal, how we love our product, and how we were taken care of during our shopping journey.
I’m not an expert, and as I said before, this is all based on experience, working for several companies, listening to customer & employee feedback, and even something as simple as talks in the break room about our jobs. It’s something to think about, and it’s something that I truly think that it’s something retailers need to think about and consider. You’re going to have to change how you operate and become more customer focused and less focused on your bottom line.
This can help increase foot traffic, sales, and make promoters of your customers. When you create a great experience, coupled with elements that don’t jerk your customers around then you can better your business. That’s the way I see it, and will things be perfect no, will it happen over night, no, but I think it can really help better things, and it all starts from within. I know some people may disagree, but these are just my thoughts on the subject.